AUD/USD plunges to four-year low

<p>AUD/USD (daily chart shown below) plunged to a four-year low on Wednesday, hitting a depth slightly below its 0.8600 downside support target. Previously, the currency […]</p>

AUD/USD (daily chart shown below) plunged to a four-year low on Wednesday, hitting a depth slightly below its 0.8600 downside support target.

Previously, the currency pair had been entrenched in a short-term consolidation above 0.8650 support for the past month since early October. That support had first been established when the price bottomed out in late January.

The recent consolidation above that key support level had formed an inverted pennant chart pattern. This week’s breakdown of the pennant pattern, followed by Wednesday’s long-term support breakdown, has tentatively confirmed a continuation of the long-term bearish trend originating from the 1.0600-area high in April of 2013.

2014-11-05-AUDUSD

In light of this major breakdown, and with US dollar strength continuing to dominate against the major currencies, the trend bias for AUD/USD remains bearish.

In the event that the currency pair trades further below the key 0.8600 support level, the next major support target to the downside resides around the 0.8300 level.

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